State Regulation and Principals Checkpoint Quiz

when the appointment of an individual agent is terminated, the insurer must notify the intermediary in writing, prior to or within --- days of filling the termination notice

15 days

what is the minimum age to apply for an insurance license in Wisconsin

18

agent is presume to have exceed the occasional exchange of business if the agent places more than how many insurance risks per calendar year with all insurers

25

what is reinsurance?

An agreement between a ceding insurer and assuming insurer

ABC insurance company receives an incomplete application and issues the policy anyway- six months later ABC realizes the missing information. What term is used that prevents forcing the policy owner to answer further questions ?

Estoppel

regardless the insurance business, which of the following is an example of a self-regulatory body?

National Association of Insurance Commissioners (NAIC)

Hazard

Something that increases the chance of loss

acts requiring a person to be licensed as a producer includes all the following EXCEPT

advertising insurance policies

when transacting business in this state an insurer formed under the laws of another country is known as a/n

alien insurer

an individual who negotiates coverage fo compensation on behalf of an insurer -- best describes

an agent

an example of unfair discrimination is BEST demonstrated by which of the following situations?

an insurer assigns a premium rating to an applicant because of studies that suggest members of the applicant's race have a shorter than average life expectancy

which of the following types of agent authority is also called "perceived authority" ?

apparent

a person who does not lock the door or does not repair leaks shows an indifferent attitude- this person presents what type of hazard

morale

on a participating insurance policy issued by a mutual insurance company, dividends paid to the policyholders are

not taxable since the IRS treats them as a return of a portion of the premium paid

a participating insurance policy may do which of the following

pay dividends to the policy owner

which of the following statements is an accurate comparison between private and government insurers

private insurers may be authorized to transact insurance by state insurance departments

which of the following actions or statements would be considered misrepresentation?

stating that policy dividends are guaranteed

Which of the following insurers are owned by stockholders who have the usual rights of ownership, including the fight of voting

stock

what is the maximum penalty for habitual willful noncompliance with the Fair Credit Reporting Act

$2,500

which of the following is not an essential element of an insurance contract

Counter offer

an insurance organization that does not issue insurance policies but provides a meeting place for underwrites to conduct business is known as a

Lloyd's Association

which of the following statements regarding the payment of commissions is NOT correct?

a producer may not share commissions with a licensed nonresident producer

which of the following would describe a producer engaging in the unlawful act of rebating?

a producer pays the premiums for a policyholder with the expectation that the policyholder will pay her back

which of the following activities is NOT an example of misrepresentation

an agent tells a prospect that the police has achieved a certain level of dividends for the past 5 years

in insurance, an offer is usually made when

an applicant submits an application to the insurer

in order to sell insurance for an insurer, the producer must first

be appointed by that insurer

an insurance company must contain all of the following to be considered legally binding EXCEPT

beneficiary's consent

contracts that are prepared by one party and submitted to the other party on a take-it-or-leave- it basis are classified as

contracts of adhesion

Which of the following actions is NOT an unfair claims method?

denying a claim within a reasonable time after a proof of loss statement was completed

an insurance company sells an insurance policy over the phone in response to a TV ad. which of the following best describes this act

direct response marketing

the chief officer of the state insurance department is NOT responsible for

enacting insurance laws

all of the following are duties of insurance licensees EXCEPT

file the list of agency appointments with the Department of Insurance

When doing business in this state, an insurance company that is formed under the laws of another state is known as which type of insurer?

foreign

which of the following entities is not an insurer but an organization is formed to provide insurance benefits for members of an affiliated lodge or religious organization?

fraternal benefit society

in insurance transactions- fiduciary responsibility means

handing insurer funds in a trust capacity

Which insurance principle states that if a policy allows for greater compensation than the financial loss incurred, the insured may only receive benefits for the amount lost?

indemnity

What do individuals use to transfer their risk of loss to a larger group?

insurance

the producer's 16 year old son works in insurance sales office. the producer would like to pay the son for insurance sales. Which of the following statements is accurate?

insurance sales compensation may not be paid to the son

which statements regarding insurable risks is NOT correct?

insureds cannot be randomly selected

all of the following actions by a person could be described as risk avoidance EXCEPT

investing in the stock market

all of the following would be considered to be unfair and deceptive trade practices EXCEPT

issuing checks in full settlement of a claim that contain language releasing the insurer from liability

exclusive agents do not have responsibility for

licensing producers

which of the following is the basis of a claim against an insurance policy?

loss

the head of the department of insurance can suspend a producer's license for all of the following reasons EXCEPPT

making conversation efforts regarding the replacement of policies

An insured stated on her application for life insurance that she had never had a heart attack, when in fact she had a series of minor heart attacks last year for which she sought medical attention. Which of the following will explain the reason a death benefit claim is denied?

material misrepresentation

an insurer purchased an insurance policy 5 years ago. last year she received a dividend check from the insurance company that was not taxable. this year she did not receive a check from the insurer. from what type of insurer did the insured purchase the policy

mutual

an agent offers his clients free tickets to a sporting event in exchange for the purchase of an insurance policy. the agent is guilty of

rebating

to increase sales activity as a new agent, norms offers two nights stay a nice downtown hotel to the first 10 clients who purchase a homeowners, auto and life insurance policy with his agency-- norm is guilty of

rebating

what type of insurance is based on mutual agreements among subscribers

reciprocal insurance

what method do insurers use to protect themselves against catastrophic losses

reinsurance

a producer's license may be revoked for all the following activities

soliciting controlled business (e.g close family members)

a certificate of authority authorizes an insurer to do business in a state- which of the following insurers are not required to have a certificate of authority

surplus lines insurer

which of the following is a characteristic of a Reciprocal Insurance exchange?

the chief administrator of then insurer is called an "attorney- in fact"

which of the following is not a characteristic of an insurable risk

the loss must be catastrophic `

churning

the replacing insurance policies for the sole purpose of making commissions and its is illegal

in insurance policies, contract ambiguities are automatically ruled in the favor of the insured. what privilege does the insurer have to order to balance this?

the right to determine the wording of a policy

which of the following is NOT a goal of risk retention

to minimize the insured's level of liability in the event of loss

agents who persuade insured to cancel a policy in favor of another one when it might not be in the insured's best interest are guilty of

twisting

A producer who fails to segregate premium monies from his own personal funds is guilty of

commingling

by examining an insurer's records, the head of the department of insurance assesses the insurer's

compliance with state laws

An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated?

consideration